Blockchain for Remittance

Blockchain for Remittance


Remittance refers to the transfer of money across long distances, often between people living in different countries. Typically, remittances involve immigrant workers sending money to their country of origin. Regarding financial flows to developing countries, remittances are the largest, surpassing foreign direct investments and official development assistance. According to the World Bank Group, the remittance industry experienced significant growth in the past years. For many developing economies, remittances are a critical source of income, with some countries heavily reliant on them. For example, Haiti receives international remittances that account for roughly 30% of its GDP yearly.

The Problem Explained

According to estimates by the World Bank, sending a $200 remittance currently incurs an average global cost of around 7%. Worldwide remittances amounting to $689 billion in 2018 equates to approximately $48 billion in operational costs.

Moreover, most remittance solutions rely on third-party services and financial institutions, which makes the process highly inefficient. The need for multiple intermediaries not only results in high fees but also extends the duration of transfers to several days or even weeks.

Blockchain technology, on the other hand, presents promising solutions to the inefficiencies of the remittance industry. This article explores some of the possibilities and existing solutions.

Is Blockchain a Good Solution? 

Blockchain remittance firms aim to streamline the entire process, eliminating intermediaries and providing fast, hassle-free payment solutions. Unlike traditional services, blockchain networks do not require a slow process of approving transactions involving multiple mediators and manual labor.

Instead, a blockchain system employs a distributed network of computers for conducting global financial transactions. The process of verifying and validating transactions is carried out in a decentralized and secure manner across several computers. Blockchain technology can offer faster and more reliable payment solutions at significantly lower costs than traditional banking systems.

In summary, blockchain technology can address major challenges in the remittance industry, such as high fees and long transaction times, by reducing the number of intermediaries involved. As a result, operational costs can be substantially reduced.

Use Cases

To address issues connected to international transfers, many companies are turning to blockchain technology, which offers increased efficiency, security, and transparency. Let's explore some of the most promising use cases of blockchain in the remittance industry.

Mobile Applications 

Various companies use blockchain technology to offer innovative payment solutions, creating mobile applications. Mobile crypto wallets allow users to send and receive digital assets globally and switch easily between crypto and fiat currencies. Apart from trading Bitcoin and other cryptocurrencies, users of such wallets can also pay bills, purchase game credits, and make international remittances. In addition, some financial services can be accessed without requiring a bank account.

Digital Platforms 

Companies use digital platforms that connect with the traditional financial system to offer payment solutions and currency exchange. Such platforms aim to promote financial access and connect people and financial institutions worldwide. They often use their native currencies as a bridge currency for global trades between fiat and cryptocurrency assets. Digital platforms enable users and financial institutions to send and receive money with reduced transaction costs.


In addition to mobile applications and online platforms, some companies are exploring using ATMs to send and receive money globally. This approach may be particularly beneficial in underdeveloped areas with limited access to banking systems and the Internet. In such a way, companies are developing new remittance systems that integrate blockchain technology with ATMs. The plan is to create prepaid cards with several functionalities. By combining blockchain ledgers with ATMs, the need for intermediaries could be drastically reduced. Additionally, users wouldn't require a bank account, and the ATM companies would most likely charge a nominal fee for the service.

Current Challenges and Limitations 

Blockchain technology can offer numerous benefits to the remittance industry, yet it needs to overcome various barriers and limitations. One such challenge is converting crypto and fiat currencies, which can be difficult and require a bank account. Peer to peer transactions can alleviate the need for a bank, but users may still need to convert to fiat to use the money.

Another issue is the lack of mobile and Internet access in underdeveloped countries, which can hinder the adoption of blockchain technology. One possible solution to this problem is the use of blockchain-compatible ATMs.

Regulation is another concern as it is still in its early stages, with many countries lacking clear laws. However, the further adoption of blockchain technology is likely to push regulation forward.

The complexity of using cryptocurrencies and blockchain technology is also a major limitation. Many users still rely on third-party service providers because the technology is not user-friendly. Additionally, cryptocurrency markets are highly volatile, which can be a challenge for everyday use. Stablecoins may provide a viable solution to this problem.


The past decade has witnessed significant growth in the remittance industry, and is expected to continue expanding in the coming years. This trend can be attributed to the increasing number of people migrating for better job opportunities and education. Despite this growth, the remittance industry still needs to improve its efficiency and limitations. To address this, more companies are turning to blockchain technology to provide more efficient alternatives. As a result, we can expect to see greater adoption of these solutions by immigrant workers in the near future.

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